Thursday, July 18, 2013

Marriage and money: Our biggest mistakes Part 1

Five couples reveal the worst financial mistakes they've made and what they've learned

Too much debt

Name: Deacon and Kim Hayes
Relationship status: Married five years
City: Phoenix, Ariz.
Shortly after their 2008 wedding, Deacon and Kim Hayes sat down to assess their finances. The couple was shocked to discover that between the two of them, they had more than $50,000 in debt and two mortgages.
Between student loans, an auto loan for a brand-new Nissan Altima and about $7,000 in credit card debt, their outstanding debt added up to $52,000. And that didn't include the two mortgages Deacon had inked in 2006 before their marriage, one for the condo they lived in and one an investment property.
So the couple took action. They cut all of the extras: out went their cable subscription, a gym membership and eating out. Most importantly, they sold the new car, along with an older car, and replaced them with two used cars that they bought for about $5,000. The cuts freed up hundreds of dollars a month to pay down their debt.
Despite all the money saving moves, Hayes foreclosed on the property that he had been renting out in 2010. He now realizes the home was the opposite of a great investment.
In the same year, however, the couple managed to pay down all of their non-mortgage related debt. At first, "we didn't really see the light at the end of the tunnel," Deacon said. "It was overwhelming. There was tension. But it was a catalyst for us to start making some drastic changes."
A bad investment

Name: Rachele and Blaise Bouchand
Relationship status: Newlyweds
City: Bellevue, Wash.
Even financial planners can make mistakes with their money.
When Rachele Bouchand was dating her now-husband Blaise, he asked her to take a look at the small individual retirement account that a friend had helped him open in 2011. But Bouchand put it off, assuming that the investment was fine.
When she finally looked at the account three months ago, she discovered his $6,000 had been invested in a gold and commodities fund that came with high fees and had lost money, even as stocks soared.
While a basic stock fund would likely have returned major gains, his investment had sunk to around $4,000, she said. They have since moved the account, and Bouchand gave her husband advice she usually gives her clients.
"I gave my husband a mini-lesson on asset allocation and fees," she said. "I was so embarrassed and angry that this happened in my own household."

Name: Chris and Lyndsie Miles
Relationship status: Married 11 years
City: Salt Lake City, Utah
In the mid 2000s, things were good for the Miles family. But when the recession hit and Chris' investment advisory business faltered, the couple started hemorrhaging cash.
They were spending thousands more a month than Chris's small business was taking in. The couple lost nearly everything, including a Mercedes and their home, which the bank foreclosed on in 2009, a week after their fourth child was born.
Now that the family has gotten their spending in check, Chris says they have learned the importance of emergency savings and not relying on their home as a possible source of quick money.
"The biggest lesson we learned was to not be overly optimistic, arrogant and foolish with our money," Chris Miles said.

Avoided money talks

Name: Sonita Lontoh and Adam Skarsgard
Relationship status: Married 12 years
City: San Francisco, Calif.
Sonita Lontoh and her husband Adam Skarsgard have starkly contrasting money habits. Lontoh, for example, loves splurging on designer shoes and clothing purchases, while Skarsgard prefers to save for big sporting events, like the Super Bowl or Kentucky Derby.
In their first years of marriage, Lontoh said she avoided serious money talks, preferring instead to keep a wall between them and their finances.
"For me, money is a symbol of my independence so having to make decisions with someone else took a while for me to get used," Lontoh said.
The couple has since learned to communicate, and now agree on a budget that works for them both. "It's actually much better for the marriage," she said.
Quit a Job too Soon
Name: David Saucedo and Mariana Terrezas
Relationship status: Engaged
City: El Paso, Texas
After almost five years of working as a tax accountant, David Saucedo had succumbed to major "corporate burnout."
He quit his job, opting instead to work for the family locksmithing business. While he was thrilled to be out of corporate America, his decision also meant a major salary cut -- and limiting the financial options for him and his soon-to-be wife.
"I put my happiness above the financial stability that I could have brought into the marriage," he said. "So right now, things are a little tough."
Combined with a recent car loan his fiancee took out, his new salary has made the couple's goal to qualify for a mortgage more difficult than they had expected. While Saucedo said he doesn't regret his decision, he wishes he had timed his move a bit differently.
"In hindsight, I should have closed on a house with my old job," he said. "I just wasn't thinking 
Avoided money talks
ame: Sonita Lontoh and Adam Skarsgard
Relationship status: Married 12 years
City: San Francisco, Calif.
Sonita Lontoh and her husband Adam Skarsgard have starkly contrasting money habits. Lontoh, for example, loves splurging on designer shoes and clothing purchases, while Skarsgard prefers to save for big sporting events, like the Super Bowl or Kentucky Derby.
In their first years of marriage, Lontoh said she avoided serious money talks, preferring instead to keep a wall between them and their finances.
"For me, money is a symbol of my independence so having to make decisions with someone else took a while for me to get used," Lontoh said.
The couple has since learned to communicate, and now agree on a budget that works for them both. "It's actually much better for the marriage," she said.

OK now for my two cents: 

Too much Debt for the Hays family.
Too much Debt is bad for everyone and it can easily get away from you if not careful. It looks like you did the right thing in cutting way back. As for the house, you could not have known the values would have dropped like they did in 2010. Don't sweat that part, keep going and learn from your mistakes. 
Bad investment for the Bouchands
Funds have to be monitored and if not they can get away from you aw well. You did not do so bad but learn the lesson to not leave anything sit too long. I lost hundreds of thousands even when managed by big firms with so called professionals  Lear more about managing your own money and keep an eye on it. 
No Emergency savings for the MIles fam. 
Everyone should put away fro a rainy day.but wow the MIles family hit me hard. They had the good business but could not adjust to the times. They got foolish and arrogant that is dangerous. They also seemed to have only one income source. 
When in business for your self the most important things are:save a big nest egg, create multiple streams of income, learn market trends and get off or on at the right times. 
Quit too soon for Dave & Mariana 
David was romancing the dream of being his own boss without ever having been down that road even a few blocks. The road is scary but beyond the fear is everything you ever dreamed of. 
Quitting too soon is a major blunder and see it done way too often but I have to give it to him credit he doesn't regret it. Do not ever regret it, just learn and keep learning about money.
Not talking about money 
This along can cause divorce. I have had $10 disappear before and remember the feeling. Ultimately it lead to divorce and I cant agree more. Talking about it and making agreement are the way to go. 
Talking about money for people is one of the hardest yet most helpful talked you can have. get over it and work it out or it will tear you apart. Seek professional help if required but do it. 
NEXT LOOK FOR THE POSTS ABOUT DEALING WITH THESE SAME ISSUES.
Learn to talk about money with your family Kids included. Too many people do not talk to their kids about money or sex and leave it to them to figure it out.  Read books together on money Like Rich Dad Poor Dad. 

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